Because swap transactions are conducted with different delivery terms, the risk of exchange rate changes caused by different time periods can be avoided, which has played a positive role in international trade and international investment. Specific performance in:

Conducive to importers and exporters

1. Hedging is beneficial for importers and exporters.

For example, a British exporter signed a contract with an American importer, agreeing to pay in US dollars four months later. This means that British exporters will get a dollar spot in four months. During this period, if the exchange rate of the US dollar falls, the exporter will bear the risk. In order to preserve the value of the loan, the exporter can sell the same amount of four-month forward dollars immediately after the transaction is completed, so as to ensure that the export income denominated in the exporter's local currency will not suffer losses due to the exchange rate changes four months later. In addition to importers and exporters, multinational companies often use hedging to keep the domestic value of foreign currency assets and bonds on their balance sheets unchanged.

In essence, there is no difference between hedging and swap transactions. Because in hedging, the delivery period of the two transactions is different, and this is the exact meaning of swap transactions. Anyone who uses swaps can also get the benefit of hedging. But in operation, swap transaction is different from hedging, that is, in hedging, the time and amount of two transactions can be different.

Conducive to securities investors

2. It is beneficial for securities investors to carry out currency conversion and avoid the risk of exchange rate changes.

Swap trading enables investors to convert idle currency into needed currency and use it to gain benefits. In reality, many companies, banks and other financial institutions use this new investment tool for short-term foreign investment. In this short-term foreign investment, they must exchange their own currency for another country's currency and then transfer it to the investment country or region. However, when the funds are recovered, investors may suffer losses due to the fall of foreign currency exchange rate. Therefore, swap transactions must be used to avoid this risk.

Be good for the bank

3. It is beneficial for banks to eliminate exchange rate risks arising from separate forward transactions with customers.

Swap transactions can help banks eliminate the exchange rate risk of separate forward transactions with customers, balance the delivery date structure of spot transactions and forward transactions, and rationalize the bank's asset structure.

For example, after a bank bought a forward of $654.38+0 million from a customer for six months, it must sell the same amount of forward dollars on the same delivery date in order to avoid risks and close its position. However, in the inter-bank market, it is more difficult to sell individual forward foreign exchange directly. Therefore, the bank adopts such an approach: first, it sells 6,543.8+0,000 spot dollars in the spot market, and then makes an opposite swap transaction, that is, it buys 6,543.8+0,000 spot dollars and sells 6,543.8+0,000 forward dollars for a period of six months. In this way, the spot dollar trading offset each other, and the bank actually only sold a six-month forward dollar, which equalized the dollar overbought in the transaction with customers.